ESTTA Tracking number:
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`ESTTA1314835
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`Filing date:
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`10/09/2023
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`Proceeding no.
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`92080108
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`Party
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`Correspondence
`address
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`Submission
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`Filer's name
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`Filer's email
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`Signature
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`Date
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`Attachments
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`Plaintiff
`Sonic.net, LLC
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`ANDREW J SPAULDING
`SPAULDING MCCULLOUGH & TANSIL LLP
`90 SOUTH E STREET
`SUITE 200
`SANTA ROSA, CA 95404
`UNITED STATES
`Primary email: aspaulding@smlaw.com
`Secondary email(s): sterling@smlaw.com, chisholm@smlaw.com
`707-524-1900
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`Opposition/Response to Motion
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`Terry S. Sterling
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`sterling@smlaw.com, aspaulding@smlaw.com, dranit@smlaw.com,
`chisholm@smlaw.com
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`/Terry S. Sterling/
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`10/09/2023
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`Petitioners Opposition to MSJ Redacted.pdf(550071 bytes )
`Sterling Decl with Exhibits Redacted.pdf(4759741 bytes )
`Opposition to MSJ Jasper Dec Redacted.pdf(260531 bytes )
`Opposition to MSJ Mendoza Dec Redacted.pdf(196904 bytes )
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`

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`THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`)
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`SONIC.NET, LLC,
`) Cancellation No. 92080108
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`) Mark: SONICTEL
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`) Registration No. 5,245,621
`Petitioner,
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`)
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`
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`) THIS PLEADING CONTAINS CONTENT
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`
`
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`v.
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`) DESIGNATED AS CONFIDENTIAL
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`) ATTORNEYS EYES ONLY – SENSITIVE
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`SONICTEL, INC.,
`) BUSINESS INFORMATION AND
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`
`
`
`) COMPETITIVE BUSINESS INFORMATION
`Registrant.
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`
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`____________________________________)
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`PETITIONER’S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT
`(REDACTED VERSION)
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`I. INTRODUCTION
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`In this proceeding, SONIC.NET, LLC (“Petitioner”) seeks cancellation of SONICTEL,
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`INC.’s (“Respondent”) registration of the SONICTEL trademark (the “SONICTEL Mark”) on
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`the grounds that: (1) Petitioner’s trademarks SONIC.NET, SONIC, and the SONIC. design mark
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`(collectively, the “SONIC Marks”) have priority of registration and priority of use over the
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`SONICTEL Mark; and (2) Respondent’s use of the SONICTEL Mark creates a high likelihood
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`of confusion with respect to the source of the telecommunication services provided by
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`Respondent.
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`In its Motion for Summary Judgment (“MSJ”), which was filed before any discovery had
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`been taken or allowed in this case, Respondent argues that the “undisputed material facts” show
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`that Petitioner’s claims are barred by the doctrine of laches, and that there is no likelihood of
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`confusion between the SONICTEL Mark and the SONIC Marks. As set forth below,
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`Respondent has failed to meet its burden of proving that there are no genuine issues of material
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`

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`fact in dispute with respect to either Respondent’s laches defense or the purported lack of any
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`likelihood of confusion between the SONICTEL Mark and the SONIC Marks.
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`A.
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`Petitioner
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`II. THE PARTIES
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`Petitioner is an Internet Service Provider (“ISP”) based in Santa Rosa, California (about
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`40 miles north of San Francisco). Petitioner offers a broad range of telecommunications and
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`internet services to residential and business customers throughout the State of California,
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`including ISP services, traditional telephone services and cloud-based communications services
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`and equipment, including Voice over Internet Protocol (VOIP) services. [Declaration of Dane
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`Jasper (“Jasper Decl.”), ¶ 3.] Petitioner currently services more than 100,000 customers in
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`approximately 125 California communities including the San Francisco Bay Area, Sacramento,
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`and Los Angeles. Petitioner is the largest independent Internet Service Provider (ISP) in
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`Northern California. Petitioner also provides services such as email, domain name registration,
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`and website hosting to customers located elsewhere in the United States, outside of California.
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`[Jasper Decl., ¶ 4.]
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`Petitioner’s internet services have been recognized by nationally recognized technology
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`publications and organizations. For example, PCMag.com selected Petitioner as the 2019 Fastest
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`Internet Service Provider in the United States. The article stated “Sonic’s PCMag Speed Index is
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`the highest we have ever seen in Fastest ISPs history for an individual ISP.” Electronic Frontier
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`Foundation, a nationally renowned organization defending digital privacy, free speech and
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`innovation, has repeatedly recognized Petitioner for policies that protect the rights of its
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`customers. [Jasper Decl., ¶ 5.]
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`2
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`As reflected in the TDSR printouts attached to the Petition, Petitioner owns three
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`registrations of the SONIC Marks. Petitioner applied for and obtained federal registrations for
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`the SONIC Marks as follows:
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` SONIC.NET is registered for use as an ISP to provide telephone services, and in
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`connection with “hosting websites on the internet; hosting of internet servers for
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`others; technical support services, namely, technical administration of servers for
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`others and troubleshooting in the nature of diagnosing server problems.” The
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`application to register SONIC.NET was filed on April 25, 2012 and the registration
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`issued on January 29, 2013. The registration asserts a date of first use of August 2000.
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` SONIC is registered for use as an ISP to provide e-mail services, and telephone
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`communication services, and in connection with “hosting internet sites for others;
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`hosting digital content on the internet, domain name registration services.” The
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`application to register SONIC was filed on November 12, 2013 and the registration
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`issued on March 24, 2015. The registration asserts a date of first use of November 20,
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`2014.
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` The SONIC. design mark is registered for use as an ISP to provide e-mail services, and
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`telephone communication services, and in connection with “hosting internet sites for
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`others; hosting digital content on the internet, domain name registration services.”
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`The application to register the SONIC design mark was filed on January 8, 2015 and
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`the registration issued on September 1, 2015. The registration asserts a date of first
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`use of November 20, 2014. [Jasper Decl., ¶ 6.]
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`For decades the SONIC marks have been, and they continue to be, used in the marketing
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`and promotion of Petitioner’s services. They are prominently displayed on Petitioner's website,
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`3
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`signage, newsletters, mailers, and other marketing materials. Petitioner has expended substantial
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`time, money, and resources marketing, advertising, and promoting the services offered under the
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`SONIC Marks, including its telecommunications and VOIP services. Through its widespread
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`marketing efforts and media recognition, Sonic has developed significant goodwill in the SONIC
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`Marks. [Jasper Decl., ¶ 7.]
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`As a result of its widespread, continuous, and exclusive use of the SONIC Marks to
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`identify its services, and Sonic as their source, Sonic owns valid and subsisting federal statutory
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`and common law rights to the SONIC Marks.
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`B.
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`Respondent
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`Respondent, a New York corporation that provides VOIP services and related
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`telecommunications services and equipment, owns a federal registration for SONICTEL.
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`Respondent applied to register SONICTEL on December 20, 2016, and the registration issued on
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`July 18, 2017. The registration asserts January 10, 2015 as the date of first use and first use in
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`commerce. [See TDSR printout for SONICTEL attached to the Petition.]
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`As indicated by the use and registration information for the SONICTEL Mark and the
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`SONIC Marks, Petitioner’s first use of SONIC precedes by many years Respondent’s first use of
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`SONICTEL, and all of the SONIC Marks were already registered on the U.S. Principal Register
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`when Respondent applied to register SONICTEL.
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`III. STATEMENT OF THE CASE
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`In the Spring of 2022, Respondent signaled its intention to begin doing business in
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`California. On March 30, 2022, Respondent registered to transact business in California by
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`filing a Statement and Designation by Foreign Corporation with the California Secretary of State,
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`and on April 29, 2022, Respondent applied for a license with the California Public Utilities
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`4
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`Commission (CPUC) to provide intrastate interexchange telecommunications services in
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`California (the “CPUC Application”). [Jasper Decl., ¶ 8.] After those filings came to
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`Petitioner’s attention, Petitioner responded by filing a Protest to the CPUC Application (filed
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`through Petitioner’s subsidiary, Sonic Telecom, LLC) on the grounds that Respondent had
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`engaged in improper conduct by using a name that is confusingly similar to Petitioner’s name;
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`that infringes on Petitioner’s trademark rights; and that creates confusion for customers and
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`harms Petitioner’s ability to compete.1 [Jasper Decl., ¶ 9.]
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`Through its attorneys, Petitioner also sent a letter to Respondent demanding that
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`Respondent cease its use of the SONICTEL name for telecommunications and related business
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`and abandon its federal registration of SONICTEL. [Declaration of Terry S. Sterling (“Sterling
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`Decl.”), ¶ 3.]
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`On July 12, 2022, Petitioner filed its Petition for Cancellation of the SONICTEL
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`registration (the “Petition”) on the grounds that the SONIC Marks have priority of registration
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`and priority of use over the SONICTEL Mark, and Respondent’s use of SONICTEL in
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`connection with the provision of telecommunication services creates a likelihood that consumers
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`will be confused as to the source of Respondent’s services. [Sterling Decl., ¶ 4; 1 TTABVUE.]
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`By stipulation of the parties, the cancellation proceeding was suspended while the parties
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`continued the settlement discussions they had begun before the Petition was filed, but the
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`discussions were unsuccessful and the suspension ended on December 18, 2022. Pursuant to the
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`Consent Motion for Suspension of Settlement entered by the Trademark Trial and Appeal Board
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`(the “Board”) on November 17, 2022, Respondent’s last day to file an Answer to the Petition
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`1 Respondent has since withdrawn the CPUC Application. [Jasper Decl., ¶ 9.]
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`5
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`was December 21, 2022 and the discovery period was set to open on January 20, 2023. [Sterling
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`Decl., ¶ 5; 14 TTABVUE.]
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`On December 21, 2022, Respondent filed its Answer and Affirmative Defenses to the
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`Petition, which responded to the allegations of the Petition and asserted that the claims in the
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`Petition are barred by the affirmative defenses of laches, acquiescence, and estoppel. [16
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`TTABVUE.] Shortly thereafter, on January 19, 2023 – one day before the discovery period was
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`set to open – Respondent filed the MSJ.2 [Sterling Decl., ¶ 6; 17 TTABVUE – 21 TTABVUE.]
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` On May 25, 2023, the Boad entered an order granting Petitioner’s Motion to Allow
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`Discovery as to a specified subset of topics related to Respondent’s laches defense and likelihood
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`of confusion claim, finding that Petitioner sufficiently demonstrated a need to obtain written
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`discovery concerning such topics. [28 TTABVUE.]
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`In the May 25 Order, the Board also struck Respondent’s affirmative defenses of laches,
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`acquiescence, and estoppel on the basis that such defenses were insufficiently pleaded.
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`Respondent was granted leave “to file and serve an amended answer that properly pleads an
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`affirmative defense of laches if it has a good faith basis for doing so, failing which the defense
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`will receive no further consideration, and Respondent’s motion for summary judgment will be
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`denied on that issue.” Ibid.
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`Respondent filed an Amended Answer on June 12, 2023. [29 TTABVUE.]
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`2 In an attempt to prevent Petitioner from obtaining evidence it could use to oppose the MSJ, Respondent filed the
`MSJ before the opening date for discovery that was set by the Board. In order to effectively oppose the MSJ,
`Petitioner was forced to file a Motion to Allow Discovery under Federal Rules of Civil Procedure Rule 56(d). [23
`TTABVUE.] Despite Respondent’s opposition [25 TTABVUE.], the Motion was granted. [28 TTABVUE.]
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`6
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`A.
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`Legal Standards
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`IV. ARGUMENT
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`Pursuant to FRCP 56(a), a motion for summary judgment will be granted if the moving
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`party shows that (1) there is no genuine dispute as to any material fact, and (2) the moving party
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`is entitled to judgment as a matter of law. OddzOn Prods., Inc. v. Just Toys, Inc., 122 F.3d 1396,
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`1401, 43 USPQ2d 1641, 1644 (Fed.Cir.1997); TBMP §528.01. As the moving party,
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`Respondent has the burden of proving both the absence of a genuine dispute as to any material
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`fact, and that Respondent is entitled to judgment as a matter of law. Celotex Corp. v. Catrett,
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`477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
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`If the moving party meets its burden and comes forward with evidence that, if
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`uncontroverted, would entitle it to a verdict in its favor, the burden shifts to the nonmoving party
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`to either show that the moving party's evidence is not sufficient to support a verdict in its favor,
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`or to counter with sufficient contrary evidence. Securities and Exchange Commission v.
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`Blackburn, 431 F.Supp.3d 774, 801 (E.D. La. 2019). In ruling on a motion for summary
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`judgment, the nonmoving party must be given the benefit of all reasonable doubt as to whether
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`genuine disputes of material fact exist; and the evidentiary record on summary judgment, and all
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`inferences to be drawn from the undisputed facts, must be viewed in the light most favorable to
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`the nonmoving party. TBMP §528.01; Lloyd’s Food Products Inc. v. Eli’s Inc., 987 F.2d 766, 25
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`USPQ2d 2027, 2029-30 (Fed. Cir. 1993); Opryland USA Inc. v. Great American Music Show,
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`Inc. supra, 970 F.2d 847 at 850.
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`B.
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`Respondent Has Not Established That There Are No Genuine Disputes Of Material
`Fact Or That It Is Entitled To Judgment In Its Favor As A Matter Of Law
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`The Petition seeks cancellation of Respondent’s registration of the SONICTEL Mark
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`based on Petitioner’s prior use and prior registration of the SONIC Marks, and on the likelihood
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`7
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`of confusion between the SONICTEL Mark and Petitioner’s SONIC Marks. Respondent does
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`not deny that the SONIC Marks have priority over the SONICTEL Mark. However, Respondent
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`argues that it is entitled to summary judgment because the “undisputed material facts” allegedly
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`show that (1) the Petition is barred by the doctrine of laches, and (2) there is no likelihood of
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`confusion between the SONICTEL Mark and the SONIC Marks.
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`1. There Are Genuine Disputes Of Material Fact With Respect To
`Respondent’s Laches Defense.
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`Laches is an equitable affirmative defense that is available in a cancellation proceeding
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`based on a likelihood of confusion. Nat’l Cable Television Ass’n v. Am. Cinema Editors, Inc.,
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`971 F.2d 1572 (Fed Cir. 1991). To prevail on a laches defense, the party whose trademark has
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`been challenged must show (1) undue and unreasonable delay by the challenging party in
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`asserting its rights, and (2) prejudice to the challenged party resulting from the delay. Teledyne
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`Techs., Inc. v. W. Skyways, Inc., 78 USPQ2d 1203,1210 (TTAB 2006); Ava Ruha Corp.. v.
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`Mother’s Nutritional Ctr., Inc., 113 USPQ2d 1575, 1580 (TTAB 2015). To succeed on a motion
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`for summary judgment based on laches, the moving party must establish that there are no
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`genuine disputes of material fact regarding either factor (undue and unreasonable delay by the
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`challenging party, or prejudice to the challenged party). Gasser Chair Co. v. Infanti Chair
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`Manufacturing Corp., 60 F.3d 770, 34 USPQ2d 1822, 1824 (Fed. Cir. 1995).
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`a. Undue and Unreasonable Delay
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`Respondent contends that there was undue or unreasonable delay by Petitioner in filing
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`the cancellation proceeding on July 12, 2022, almost five years after Respondent’s registration of
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`the SONICTEL mark on July 18, 2017.3 Teledyne Techs., Inc. v. W. Skyways, Inc. supra, 78
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`3 In the MSJ, Respondent comments that it believes that Petitioner knew or should have known of Respondent’s use
`of “SONICTEL” in 2015, but Respondent offers no supporting evidence for that claim and Respondent states that
`for purposes of this MSJ, it is not arguing that the laches period began in 2015.
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`8
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`USPQ2d 1210, n.10 (in a cancellation proceeding the period of delay for laches purposes is the
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`time between the date of registration and the date the proceeding was filed). This almost five-
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`year lapse of time is the only fact identified by Respondent in support of its claim that Petitioner
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`unreasonably delayed in its filing of the Petition.
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`While it is true that laches has been found in cases involving delays of five years or even
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`less, the determination of whether laches applies in a particular case is not based on the length of
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`the delay period alone. Jansen Enters. Inc. v. Rind, 85 USPQ2d 1104 (TTAB 2007); Pinkette
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`Clothing, Inc. v. Cosmetic Warriors Limited, 894 F.3d 1015, 1027 (9th Cir. 2018) (laches does
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`not typically bar claims for cancellation of a registration, “the passage of time must be
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`accompanied by circumstances which estop plaintiff from obtaining injunctive relief.”). By
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`definition, every registrant continues to use its mark in commerce during the 5 years of
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`registration and presumably continues to develop its goodwill during that time. Laches would
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`eviscerate the 5 year period permitted by the Lanham Act if the simple passage of time was
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`sufficient to support a defense of laches.
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`Regardless of the delay in initiating a cancellation proceeding, the Board needs to
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`consider if the delay was undue or unreasonable. That determination requires a balance of the
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`respective interests and equities of the parties, based on the specific facts of the case. See Ava
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`Ruha Corp. v. Mother's Nutritional Ctr., Inc., supra, 113 USPQ2d 1575; Kemi Organics v.
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`Gupta, 126 USPQ2d 1601 (TTAB 2018). For example, a trademark owner’s delay in learning of
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`an infringing mark is not necessarily unreasonable. Although a trademark owner must take
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`reasonable steps to maintain its rights, “it is not required to constantly monitor every nook and
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`cranny of the entire nation and to fire both barrels of [its] shotgun instantly upon spotting a
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`9
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`possible infringer.” Cullman Ventures, Inc. v. Columbian Art Works, Inc. (S.D.N.Y. 1989) 717
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`F.Supp. 96, 126–127.
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`A trademark owner’s delay in taking action against a known infringer may also not be
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`unreasonable. For example, a delay in filing may be reasonable if the trademark owner was
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`involved in other litigation regarding infringement of the mark. “A trademark owner is not
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`bound to take on more than one infringer at a time.” Cuban Cigar Brands N. V. v. Upmann
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`Intern., Inc. (S.D.N.Y. 1978) 457 F.Supp. 1090, 1098, n. 28, aff'd (2d Cir. 1979) 607 F.2d 9956;
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`McCarthy § 31:16. Also, a period of low profile sales by a new business is not generally counted
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`towards laches. A delay may also be excused if there was a change in circumstances that caused
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`the infringer to encroach on the petitioner’s business operations, including an expansion of the
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`infringer’s use of the contested mark into new product lines or geographic territories. Jansen
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`Enterprises Inc. v. Rind, supra, 85 USPQ2d 1116; see also, McCarthy § 31:19 (low profile sales
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`by a new market entrant does not trigger an obligation to sue; the trademark owner is justified in
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`delaying litigation until it is seen if the new business or product line will survive or significantly
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`impact on plaintiff’s trademark rights; expansion into new product lines or territories should be
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`sufficient to excuse a prior delay).
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`Here, the reasons why the Petition was not filed earlier create factual questions as to the
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`validity of Respondent’s defense of laches. First, for nearly two years prior to filing the Petition,
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`Petitioner was engaged in another cancellation proceeding before the Board, which consumed
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`significant resources. See TTAB Proceeding #92073339. That matter ultimately resulted in the
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`cancellation of another infringing trademark and shortly thereafter Petitioner sought cancellation
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`of the SONICTEL Mark. [Jasper Decl., ¶ 10.]
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`10
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`In addition, until March 2022 when Respondent registered to do business in California
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`and submitted the CPUC Application, Petitioner did not have a strong reason to challenge the
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`SONICTEL Mark because of the different geographic areas. However, not long before the filing
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`of this cancellation proceeding, Petitioner revised its business model to expand the geographic
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`scope of its business operations with plans to eventually offer telephone and VOIP services to
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`customers in the New York area. Once Respondent signaled its intention to operate in California
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`using a nearly identical trademark on identical services, Petitioner felt compelled to pursue all
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`available remedies including this cancellation proceeding. [Jasper Decl., ¶11.]
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`Based on the foregoing, there is a genuine dispute regarding the facts and circumstances
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`relating to Petitioner’s delay in filing the Petition, the reasonableness of Petitioner’s and
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`Respondent’s actions, and whether those actions excuse the delay in filing the Petition.
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`b. Prejudice Resulting From The Delay
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`Respondent argues that it has suffered economic prejudice as a result of Petitioner’s delay
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`in filing the Petition in that, in the seven years since Respondent started using the SONICTEL
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`Mark, Respondent made expenditures “in the six figures” to advertise and promote the
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`SONICTEL Mark and tradename.4 Respondent argues that during that period of time,
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`Respondent’s sales and the number of customers steadily increased; its advertising and
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`promotional activities in connection with the SONICTEL Mark expanded in their type, nature
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`and sophistication; and Respondent’s goodwill and reputation grew substantially. [MSJ, page 8.]
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`In support of these claims, the MSJ relies on the Declaration of Kaitlin Walsh, Director
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`of Marketing/Business Development for Respondent, filed on January 19, 2023 (“Walsh Decl.”).
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`4 Only expenditures incurred after Petitioner knew or should have known of Respondent’s use of the SONICTEL
`Mark will support a finding of economic prejudice. Eat Right Foods Ltd. v. Whole Foods Market, Inc., 880 F.3d
`1109, 1120, 125 USPQ2d 1560 (9th Cir. 2018).
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`11
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`[19 TTABVUE.] The Walsh Decl. did not provide the dollar amount of Respondent’s
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`expenditures for advertising and promotion, or the dollar amount of its sales or the number of its
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`customers, nor did it include financial documents providing that information. Instead, Ms.
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`Walsh provided percentages by which Respondent’s advertising expenditures, sales, number of
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`customers, etc. allegedly increased during different periods of time.5 Using percentages allowed
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`Respondent to exaggerate its claim of spectacular growth. For example, Ms. Walsh reported that
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`between 2018 and 2022, Respondent’s sales increased by 2,523%, its expenditures for
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`advertising and promotion of the SONICTEL Mark and tradename increased by 15,256%, and
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`the number of customers increased by 1,145%.
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`Respondent provided more specific information in a second Declaration of Kaitlin Walsh
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`(“Second Walsh Decl.”) filed in opposition to Petitioner’s Motion to Allow Discovery [25
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`TTABVUE], and in Respondent’s subsequent responses to Petitioner’s discovery that was
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`allowed by the Board. [See Exhibit A to Sterling Decl.] Those responses indicate that
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`Respondent is a modest provider of internet phone services and teleconferencing services located
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`in the relatively rural Hudson River Valley, with a small customer base located primarily in the
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`Hudson Valley and Connecticut. Respondent’s products consist of VOIP with related phone
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`services, teleconferencing services, and sales of telephones, headsets and other equipment used
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`in connection with VOIP and teleconferencing services. [RTSI Nos. 9, 10, 11, 15 and 16.] 6
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`While Respondent’s business has grown since 2015, it has not had the sort of explosive growth
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`that Respondent’s allegations, framed in terms of percentages, would seem to suggest.
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` 5 For some information, annual percentages were provided for the period of either 2018 to 2021 or 2018 to 2022,
`while other information was provided for 2015 to 2022, with no annual breakdown.
`6 True and correct copies of Respondent’s Responses to the Special Interrogatories (cited as “RTSI”) and
`Respondent’s Responses to the Requests for Production (cited as “RTRP”) are attached to the Sterling Decl. as
`Exhibits A and B.
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`12
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`Respondent had no revenue at all in 2015 or 2016 (RTSI Nos. 12 and 27) and although the
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`Interrogatory responses did not provide revenue information for 2017, they did show that
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`Respondent had only one customer in 2017. [RTSI No. 27.] This period of low profile sales
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`should not be counted towards laches. See Jansen Enterprises, supra. Since 2015, Respondent
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`has spent a total of approximately $195,000 on marketing and promotion, (RTSI No. 17 and
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`Second Walsh Decl., ¶5), but even after eight years of marketing its business and the SONICTEL
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`Mark and name, Respondent has only had a total of approximately 300 customers, some of
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`whom may no longer be customers.7
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`Laches is meant to protect an infringer whose efforts have been aimed at “build[ing] a
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`valuable business around its trademark.” McCarthy § 31:12 (citations omitted). However, the
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`information provided by Respondent is not indicative of success in “building a valuable
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`business” around the SONICTEL Mark in all of the years prior to the filing of the Petition. This
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`case is similar to Kemi Organics v. Gupta (TTAB 2018) 126 USPQ2d 1601, in which the
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`respondent argued that it had suffered economic prejudice based on the costs of growing its
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`business during the delay period. Just as the MSJ and the original Walsh Decl. provided only
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`percentage information regarding Respondent’s business, the respondent in Kemi Organics
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`initially did not provide evidence of its actual sales figures, but instead sought to rely on the fact
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`that its revenues had grown by a factor of 18 during the delay period. When the respondent in
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`that case produced the actual numbers, they showed that the respondent’s baseline annual sales
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`were only $383.52, so the 18-fold increase in revenue was relatively unimpressive. The Board
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`7 In Response to an Interrogatory asking how many new customers Respondent had each year since 2015,
`Respondent provided numbers for each year that total 302 customers. [RTSI No. 27] However, documents
`produced by Respondent indicate that Respondent has assigned a total of 314 customer numbers. [Ex. C,
`SO_000039-SO_000058.] True and correct copies of referenced pages from Respondent’s document production are
`attached to the Sterling Decl. as Exhibit C.
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`
`
`13
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`

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`concluded, “[o]n this record, we cannot find that Respondent was prejudiced because he “built
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`up a valuable business and goodwill around the mark during the time petitioner never objected.“
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`Id.
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`The mere fact that Respondent has spent time and money promoting and operating the
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`company does not establish economic prejudice for purposes of a laches defense. Internet
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`Specialties W., Inc. v. Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 991–92 (9th Cir. 2009)
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`(“Internet Specialties”). Rather, the claim of prejudice must be based on expenditures that
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`reflect “an investment in the mark as the identity of the business in the minds of the public.”
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`Internet Specialties, 559 F.3d at 991–992.
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`In Internet Specialties, the court found that the infringing party, MDE, had failed to
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`demonstrate economic prejudice as a result of Internet Specialties’ delay in filing an action
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`because the evidence did not show that MDE’s expenditures during the period of delay were
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`directed at developing brand recognition of its mark. Most of MDE's advertising expenses
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`related to “pay-per-click” advertisements, which funneled potential customers to MDE’s website
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`based on their interest in a particular type of service. Those advertisements created little to no
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`brand awareness. Id. MDE also provided evidence regarding the anticipated cost of changing its
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`name if it lost its mark, but the court found that the costs of a potential name change were not
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`significant. Finally, MDE argued that if it lost its mark, its customers (which had grown in
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`number from 2,000 to 13,000 during the delay period) would have to change their email
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`addresses. The court rejected those arguments, noting that “internet service providers frequently
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`change their names due to consolidations and mergers, and . . . the additional costs of registering
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`a new domain name are minimal.” Id.
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`
`
`14
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`

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`Here, Respondent’s claim of economic prejudice is based on Respondent’s expenditures
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`of approximately $195,000 on advertising and promotion from 2018 through 2022. Based on the
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`chart provided by Ms. Walsh, the types of advertising and promotional activities engaged in by
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`Respondent are: Respondent’s website; accounts on Facebook, Twitter, Instagram and LinkedIn;
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`Google ads; membership in the Chamber of Commerce and trade publications; attendance at
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`trade shows; email marketing; the use of unspecified marketing software; print advertisements in
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`unspecified publications; and SEO. The chart also indicates that in 2021, Respondent hired a
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`marketing director. [Walsh Decl., ¶14.] Most of these methods of advertising (Respondent’s
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`website, social media accounts, Google ads, etc.) seem likely to be “click on” advertisements that
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`do not create significant brand recognition. Making connections with local businesses and trade
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`groups in the small communities of the Hudson Valley also does not build significant brand
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`awareness with consumers.
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`Without more information, it is not possible to know how much Respondent has actually
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`spent on advertising that constitutes “an investment in the [SONICTEL] mark as the identity of
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`the business in the minds of the public.” Internet Specialties, 559 F.3d at 991–992.
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`Finally, as noted above, laches is meant to protect a party whose efforts and expenditures
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`have been aimed at “building a valuable business around its trademark” while the other party
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`delayed in challenging the mark. Internet Specialties, supra, 559 F.3d at 991. Respondent’s
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`evidence shows that it spent $195,000 over a period of five plus years to develop a business with
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`at most 300 customers (potentially significantly less). At the very least, that evidence is not
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`sufficient to establish laches for purposes of the MSJ. There are genuine questions as to whether
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`the expenses that Respondent relies on as evidence of economic prejudice justify the application
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`of laches such that the case should be dismissed without a trial on its merits.
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`
`
`15
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`

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`2. Laches Does Not Appy Where A Likelihood of Confusion Is Inevitable
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`Even if the elements of a laches defense are proven, laches will not prevent cancellation
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`where the marks and goods or services of the parties are substantially similar and confusion of
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`the marks is inevitable. Ava Ruha Corp. v. Mother's Nutritional Ctr., Inc., 113 USPQ2d 1575
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`(TTAB 2015); Ultra-White Co., Inc. v. Johnson Chemical Industries, Inc., 59 C.C.P.A. 1251,
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`465 F.2d 891, 893–94, 175 U.S.P.Q. 166 (1972) (six year delay in filing a petition to cancel did
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`not make a laches defense where confusion was inevitable); McCarthy §§ 20:77, 31:12 (“The
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`T.T.A.B. follows the same rule as do the courts in litigation: the ‘inevitability of confusion’ will
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`negate an otherwise sufficient laches defense”). This is so because any injury to a respondent
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`caused by a petitioner’s delay is outweighed by the public’s interest in preventing confusion in
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`the marketplace. Id.
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`A finding of inevitable confusion usually requires that both the marks and the services to
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`be nearly identical. Brooklyn Brewery Corporation v. Brooklyn Brew Shop, 17 F.4th 129 (Fed.
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`Cir. 2021). Here, Respondent concedes the identical nature of the parties’ services for purposes
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`of the MSJ. [MSJ, p. 22.] Accordingly, the only issue to consider is the similarity of the SONIC
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`Marks and the SONICTEL Mark.
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`When one feature of a mark is more significant than the mark’s other features, that
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`feature is considered “dominant.” It is appropriate to give greater weight to the dominant part of
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`a composite mark in determining the commercial impression created by the mark because that
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`dominant feature makes the greatest impression on the ordinary buyer. In re National Data
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`Corp., 753 F.2d 1